Is anyone slowly going mad trying to buy a house?

[tawse57]

Hi,

I have been looking to buy a house for nearly 3 years now since the height of the housing bubble in, so the experts say, early 2007 to mid 2008 depending on where you live in the country.

I live in Wales and the view is that the housing bubble peaked sometime around the early part to middle of 2008.

I have been viewing and looking at houses endlessly since then but, bizarrely, the asking prices now are HIGHER than in 2007 or 2008. In some cases they are much higher. What on earth is going on?

Are people just being very greedy? Or are people simply but greedily falling for high estate agent valuations and then wondering why they get few viewings and no buyers?

Or is it that just so many people are in massive debt that they are adding their credit debt onto the price of their house? Something does not make sense here - houses should be CHEAPER now than at the height of the bubble but people seem to be asking a lot more for their house during this recession than during the housing boom. It does not make sense.

The country is in recession, unemployment is rising and I keep reading in the papers that the banks are bust. I keep listening to David Cameron and Nick Clegg saying that the country almost went bust due to a massive housing and credit bubble fuelled by Labour and the banks when Tony Blair and Gordon Brown were running the country.

So why are house prices so much higher today than they were 3 or 4 years ago.

Some of the estate agents I have got to know well tell me that if they do not over-value a property then one of their competitors will get it on their books. What good does over-valuing do?

I only want to buy a house and had my heart set on moving in by Christmas 2009 at the latest but, at this rate, I won't be in a house till Christmas 2015!

Is anyone else frustrated by this? I just want a nice, smallish 3 bed semi but it seems that I am being asked to pay for a mansion.



T.

[FootballFriend]

I agree with you, not only there's less on the market but it's more expensive as well. We've been looking in SW London/Surrey.

Fingers crossed but we're exchanging tomorrow. We're paying 30% (not a typo) more than the vendors did 2.5 years ago.

[SybilBeddows]

Well, I dunno.
When I first started looking I thought things were going up when they should be going down. Then I realised after watching the market carefully for a while (we're lucky because we're not in a rush - would like to move to a bigger house but don't actually need to till kids start senior school in 5 years or so) that what's happening is that the houses with daft prices sit around on the market for literally years while the more reasonably priced stuff shifts quickly, which means that at any given time there'll be dozens of madly overpriced houses and only one or two reasonable ones.
As you probably know there is a substantial gap (about 20%?) between average asking prices and average selling prices so big discounts aren't uncommon, unlike a few years ago when it wasn't that rare to offer over asking price. There's also the fact that some vendors expect to discount now so they price higher in the first place.

Have you made full use of the info available online, eg sold prices in your area? The market trends on Rightmove are also very interesting here.

A few years ago when we started looking I was very frustrated by the fact that to get a house with one more bedroom, one more recep and a slightly bigger garden, I would have had to pay literally double the value of our current house, but now I'm just relieved I baulked at those prices and didn't buy at the peak.

[mylovelymonster]

You could be me. Identical experience re: convos with agents and houses left on market. Been watching market for four years, then seriously looking since Jan 2010.
Will make a suitable offer when I see a house I would actually like to live in long-term, until then 'meh'.

[tawse57]

Yes, I am aware of the 20% SybilBeddows - thanks.

Friends of mine - 2 couples and a single - have all bought in the Mumbles, Swansea, during the Summer for 20% below asking price. All offered 20% below and stuck to their guns.

I get a lot of bullish and delusional estate agents ramping asking prices in the area but 3 or 4 estate agents have privately admitted the market in Swansea is dire with one telling me she is looking for other work as she expects to be fired at the end of the Summer.

I will give you an example of one good estate agent I know who went and valued a house in the Mumbles, Swansea. He gave the valuation to the owner and she went mad, almost throwing him out.

Why? Because another estate agent, who is renowned for being perhaps the most over-valuing estate agent in Swansea IMPO, valued the house at 100K more than the above estate agent did. When the first estate agent explained that the market was dire and that no house had ever sold in that road for anything near the price, even during the height of the bubble, he was shown the door. The other estate agent, who valued the house 100K more, got the business and that house has been on the market all Summer, recently dropping its asking price by just 15K.

I am fortunate to be a cash buyer but I keep getting caught in situations where people in chains outbid me because they expect to get full asking price for their own house, so they bid near full asking price on something else. They are then shocked when they get no offers or very low offers on theirs, or the bank's surveyors says their house is worth much less.

But that already creates the thought in other sellers' minds that they will get the full asking price. I live in a city where 70% of the workforce works in the public sector and the penny simply has not dropped that we are in a long and big recession.

At the end of the day, just because people paid way over the odds during the bubble for their houses does not mean that I am now going to come along and get them out of their debt. Sorry if that sounds harsh, but I saved and saved whilst lots of people were MEWing equity from their bubble houses to go on holidays and buy cars, granite kitchens and seemingly lots of twigs in vases.

T.

[halfbabyhalfbiscuit]

Don't follow your posts TBH Tawse.

If you keep getting outbid, it just means other people attribute more value to that particular house than you. And if the vendors still aren't accepting your low offers even if their chains have collapsed, then that's their right and their decision.

If you are waiting for the market to drop further then that's your call but it's a bit odd to expect people to take a massive hit on their house sale price, just because you believe that we are in a "long and big recession". Just as you don't expect to pay off their holidays and home improvements, they don't expect to gift you their house.

If you really believe there will be a house price crash, just bide your time and buy when you think the time is right. (Do you post on HPC by the way? Your posts sound v similar to a couple of a posters on that site)

FWIW it's worth my experience as a long term market watcher has been similar to Sybils - not much is coming on the market but the reasonably priced, attractive family homes are selling quickly (but at a discount) and with not a great deal of abortive transactions. There are also a fair few properties that are lingering on the market with high price tags. But no-one is forced to buy these so that's the seller's choice!

[tawse57]

But I am only being outbid by people who cannot afford to buy a particular house unless they get the full asking price on their own silly asking price.

So things just go round and round in circles with the chains eventually falling apart. I have lost count of the number of houses that have come on the market, gone sold to contract and then back on because no one in the chain can get the banks to agree to the asking prices that they have offered.

In other words, the asking prices are way over market value - if they were fair value they would be selling. People can ask whatever they want for a house but until someone actually has the cash to pay them then it is just a fantasy offer on a fantasy asking price.

What is a HPOC?

[SecretSquirrell]

Surely these bidders are only being accepted when proceedable? And if the houses are coming back on the market why aren't you leaping in?

[halfbabyhalfbiscuit]

Exactly Secret Squirrell!

I don't know of any seller who accepts an offer from some who is not proceedable. And most Estate Agents do at least check with each other as to whether a particular buyer is proceedable and want to see proof of funding.

My point is that it's a market - if you can't agree a deal with a seller, then it's up to them to take their chances with someone else or keep marketing the place or take it off the market all together. You're not saying that there are no houses that you are interested in buying, you're saying sellers aren't accepting your low offers which is a different point all together.

HPC is House Price Crash forum. It's extremely bearish (but usually because the posters have vested interests). A lot of the male (and misogynistic) posters think it's hilarious to try to "bait" MN'ers into talking up the market

[mylovelymonster]

I hear you, Tawes.
To those finding it difficult to comprehend:-

'Procedability' often means when the prospective buyer has had an offer on the property they are selling and then an attempt is made to set up a chain. Doesn't necessarily mean they have the money ready to go.

If the vendors have had an offer of close to asking from a buyer, but then the chain doesn't complete because one link isn't able to raise a mortgage of the level they want/low valuations etc, then the chain can't progress, so the house may come back on the market but the vendor is then teased that they can achieve the same offer again so perhaps are even less amenable to a lower offer. Not much opportunity of, as you say, 'leaping in'.

The value some prospective buyers place on a house is often based, thinly, on the 'valuation' of their own house plus what they believe they can borrow, or an AIP based on their financial situation, before the specific house they wish to buy has had it's mortgage valuation. Is a huge pyramid scheme

Tawes - you have to do what's best for you, ducks. View houses and make offers. You'll get there eventually - as will we, hopefully.

I think HPOC may be something wielded in a attempt to pidgeon-hole you and therefore discredit your view

[RoxyRobin]

Tawse, Swansea and twigs in a vase can only mean you, Tulip - you've been unmasked!

I must say I enjoy your posts on HPC.

[tawse57]

Thanks mylovelymonster - glad someone can understand it.

SecretSquirrell - because in Swansea some estate agents appear so desperate for business that they will take offers for their clients from people who either have not sold or, as happened in one case, did not even have their own house on the market.

You can 2 or 3 or more of these people after a house and the seller thinks it is wonderful having so many people making offers - but none of them are proceedable.

I will give you an example. A house on for 270K and the estate agent told me that if they got 240K they would be doing good, so I make a CASH offer of 230K.

Alas, 2 others make offers of 250K and 260K. One did not even have her house on the market, one had her house on the market but was expecting to get the full 240K for her house... which has now dropped in asking over 3 months to 220K.

Sadly, the owner of the original property will now not countenance anything less than 250K. One of the above buyers was so keen that she went and got a survey on it and, guess what, the surveyor came back saying that it was worth 240K tops.

This house had a big SOLD sign outside it for a few months, almost within hours of the above offers being made.

I know of 6 properties that have had SOLD signs on them for the whole of August but which have all fallen through in the past 10 days due to banks saying they just were not worth it.

There is just complete denial about sellers and the worst situations are when 2 or more sellers assume they will get their full asking price - then chains that will never ever complete form and hang around for months.

[tawse57]

Tulip?

[SybilBeddows]

of course it is Tulip, he admits it on a thread there. It's the MEWing reference as well as the twigs that give it away; it's a very HPCish obsession.

(I fell for the first post though )

[tawse57]

LOL SybilBeddows - I found your post very supportive and informative.

[SybilBeddows]

Mumsnet is much more bearish than it used to be, you rarely see the 'prices can only go up' mentality on here now.

(And that's only partly because the property topic is stuffed to the gills with HPCers in drag.)

[CaptainNancy]

What is MEWing?

[SybilBeddows]

'What Does Mortgage Equity Withdrawal - MEW Mean?
The removal of equity from the value of a home through the use of a loan against the market value of the property. A mortgage equity withdrawal (MEW) reduces the real value of a property by the number of new liabilities against it'

(from 'Investopedia')

[CaptainNancy]

Thanks Sybil.

The situation where I am is the same though (forum invasion or not)- anything decent sells within 2 or 3 days, everything else is crap that then stays on the market for over a year, never getting reduced.

[tyler80]

After a year of looking and 6 months of serious searching we finally found somewhere and completed in August. My tip is to buy off dead people, they're much more realistic about their prices

[MadameCastafiore]

May be able to join you guys soon - went to view house this evening and really liked it.

Completely different to our house now - georgian and a semi rather than a 15th century house but we would be richer by quite a huge amount, have a bigger garden and houses are almost the same size.

Am sooo excited - just got to wait until Saturday to put our house on the market - I know but is the way we have done it each time we have moved and has worked each time.

[myron]

We are interested in a 60's bungalow which has great potential for redevelopment BUT....apparently (call me cynical) it has already had a number of offers including one over the asking price. Now, we have a 2nd viewing booked at the weekend and I have already indicated that we are cash buyers and require a 2nd viewing (DH hasn't viewed it) before assessing whether to make an offer. Why they haven't snapped up the over asking price offer and taken it off the market or let it go to sealed bids then? It is not a bargain - just in an area where not much comes on the market at any one time. caveat emptor - so far, I have 2 firms of estate agents that I would rather not do business with.

[chessy80]

Thought I'd add my two penneth which may shed some light on the current price situation. I'm a first-time buyer and almost bought a place on 2006 - at the time was offered a mortgage (based on mine and DH's combined average-ish income) of almost 220,000. For various reasons we didn't proceed. Anyway, roll on to 2011, we apply again and this time the maximum we can borrow is 145,000!!

So the upshot is we can only offer around 70% of what we could in 2006 for an equivalent house and presumably, other FTBs are in a similar situation (perhaps even worse, as that figure includes a much larger deposit). And obviously if FTBs can't pay anywhere near what they used to for FTB homes, then this goes all the way up the ladder, hence why prices are dropping.

Anyway, much as I'd like to buy, I'm happy to wait as where I live (South West), prices have already fallen around 15% and over the past few months have begun falling again, and I'm quite happy with the place we rent. I also have a fear of taking out a mortgage now and finding myself with little or no equity and not being able to move or being fleeced when its time to remortgage.

[Thepoweroforangeknickers]

I think vendors were in denial about the state of the country/economy for a long time and thought things would blow over quickly so kept their prices high. I think most people can now see that things are going to get MUCH worse. People will have to sell at lower prices - and are, cos most buyers aren't that stupid.

Football fiend - I'm speechless at you! Absolute madness.

[Becaroooo]

So, its not just me finding this hard then!? I - very naively - thought it would be so easy to find somewhere and we would be a strong buying position.....

We sold (to a no chain cash buyer) for £10k less than (reduced) asking proce....he got a bargain but we got a sale, so fair enough.

However, we have made offers on 2 houses (both 3 bed semis, nothing special really, but in the right area for us) of just £5k below asking price as they both needed work (one needed a new boiler and the other needed outbuilding made into a playroom) and were rejected.

One has since been taken off the market and IMO the other will be soon too as they are obviously not serious about selling.

I mean, honestly! In this market, rejecting a £5k below offer from no chain buyers with AIP and deposit????

Problem is definately EAs overpricing properties - then vendors get that figure in their heads and wont budge! Its not even as if EAs in this country have any surveying qualifications either!!!

I researched what properties in my area were selling for and adjusted our price accordingly....surely its common sense???

[noddyholder]

I offered 3% under asking today for a house that has been on 9 months no offers apart from ours. We are in rented cash buyers and they are wanting to part exchange on a new build which will probably sell this weekend. the agent was over the moon with our offer and assumed it would be accepted and took all my details! Then the seller said no!